Over recent months the SEC have received – and refused – a string of applications for crypto-backed exchange traded funds (ETFs). As noted previously at Crypto Traders Pro, ETFs have become the most popular of all exchange-traded products, and as such a crypto-backed fund would be big news for the markets. Over recent days it has emerged that no less than the Chicago Board Options Exchange (CBOE) have thrown their hat into the ring, and it appears the SEC are taking their application very seriously indeed.
The CBOE proposal is to offer crypto-backed shares which are developed by VanEck and SolidX, enabling customers to acquire a product which would invest directly in Bitcoin but without the challenges of buying and storing the assets themselves. By streamlining the process, reducing risk, and offering the products to more mainstream investors it is felt an ETF of this kind could significantly increase adoption and help grow the still nascent cryptocurrency economy.
CBOE is the US’ largest options exchange, with an annual trading volume of over a billion contracts, and currently offers options on more than 2000 companies and140 ETFs. VanEck are also major players in the space, and indeed the NY-based investment management firm have already submitted three (unsuccessful) applications to list crypto ETFs.
To date the SEC have refused at least a dozen crypto-based ETFs, with concerns over security, consumer safety and alleged market manipulation amongst the cited reasons. Broadly speaking a crypto-based fund will only be listed if (or when) the space has sufficient oversight and regulation that products can meet the requirements of the 1934 Securities and Exchange Act. On this occasion the SEC have actively sought public feedback regarding the application, suggesting that perhaps their stance may be softening. It remains to be seen whether this application will be deemed to be different from the rest. But the crypto community should keep the champagne on ice for now at least – the very earliest such a product could come to market is Q1 of 2019.
